Finance Minister Arun Jaitley, Revenue Secretary Ajay Bhushan Pandey and Minister of State for Finance Shiv Pratap Shukla during a press conference after the GST meet at Vigyan Bhavan in New Delhi on Thursday. PTI Photo

New Delhi: In a major relief for MSMEs, the GST Council on Thursday doubled the exemption threshold for small businesses from Rs 20 lakh to Rs 40 lakh and also allowed Kerala to impose a natural disaster cess of upto 1 per cent for a period of upto two years.

Till now, businesses with turnover up to Rs 20 lakh were exempt from paying Goods and Services Tax (GST).

The Council also considered a report of the Group of Ministers on imposing a cess in case of calamities and natural disasters. The GoM was set up after a demand for a cess was raised by Kerala after it was hit with severe floods in August last year.

"Kerala is now entitled to impose maximum cess of 1 per cent on intra-state sales for a maximum period of two years," Jaitley announced adding that the GST Council can allow some states to levy cess in case of natural disasters.

Announcing the decisions after the GST Council meeting here, Finance Minister Arun Jaitley also ruled out any further cuts in tax rates and said "reductions will be made only when revenues move up".

He said while under original GST structure, it was envisaged for those with turnover upto 20 lakh to get exemption, the threshold for some northeastern and hill states was kept at Rs 10 lakh.

"We have decided to continue with the twin structure with two slabs. While the Rs 20 lakh threshold has been doubled to Rs 40 lakh, for smaller states, the exemption has been kept at Rs 20 lakh," Jaitley said.

Even before the decision, some states, including Jammu and Kashmir and Assam, had amended their laws to increase the Rs 10 lakh threshold to Rs 20 lakh.

Jaitley said the states with the new limit of Rs 20 lakh will have the option to "opt up" and states with Rs 40 lakh limit will have the option to "opt down" over concerns of erosion of assessee base.

He said while the decision would make over 20 lakh businesses eligible for exemption, all of them may not avail it in order to continue to enjoy benefits of GST like input tax credit.

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